How to Reduce Vehicle Depreciation

Unless the vehicle you own is a classic or a collector’s item, it will be subject to inevitable depreciation. Depreciation is the rate at which your car or truck loses value over time. Did you know that some vehicles can lose 50% of their original value after around five years of ownership? However, some makes and models retain their value better than others. 10 factors that can affect a vehicle’s depreciation rate include:

1. Vehicle condition – this relates to both the internal and external condition. Most people know that dents and scratches will devalue a vehicle, but did you also know that something as simple as smoking inside your vehicle has been known to devalue a vehicle by up to £2,000 due to the lingering smell and physical damage it can leave behind? Extra modifications such as tinted windows and upgraded sound systems can also potentially increase a vehicle’s resell value.
2. Miles driven – in the United Kingdom, the average car drives around 8,000 miles per year. Driving upwards of this figure can increase the vehicle’s depreciation rate.
3. Number of previous vehicle owners – the general rule of thumb is, the fewer the number of previous vehicle owners, the better resale price you are likely to get for your vehicle.
4. Service history – skipping your annual service may feel like it’s saving you money in the short term but in the long term, it will increase your vehicle’s depreciation rate. Skipping your annual service can also lead to small problems becoming big problems (and therefore much more expensive problems to fix) if mechanical issues aren’t noticed early and resolved.
5. Vehicle reputation – some vehicle brands have a better reputation than others, and those with better reputations tend to hold their value better than the brands that are known for developing mechanical issues further down the line.
6. Most recent model – if the manufacturer releases a new version of your current vehicle model before you get around to selling it, this can decrease its value as the new model tends to be more desirable than any previous models.
7. Fuel economy – the more fuel efficient your vehicle is, the better it is likely to retain its value. This is one of the reasons diesel models often retain their value better than their petrol counterparts.
8. Road tax – the rate of road tax payable on the vehicle can also make your vehicle more or less desirable to potential buyers.
9. Transmission type – whether your car has a manual or an automatic gearbox can also affect its resale value. Vehicles with automatic transmissions tend to retain their value better than their manual counterparts.
10. Vehicle warranty – if your vehicle is still covered by its manufacturer’s warranty, this can also make it more desirable to potential buyers and increase your vehicle’s resale value.

In short, the simplest way to preserve the value of your vehicle and minimise its depreciation rate is to ensure that it is well taken care of and maintained, in terms of its interior, its exterior, and what is under its hood, along with making a smart vehicle purchase choice in the first place.